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A predictable revolution: Knauer v Ministry of Defence in the Supreme Court

The Supreme Court has today handed down its judgment [2016] UKSC 9 in the 'leapfrog' appeal to it from the decision of Bean J in Knauer v Ministry of Defence [2014] EWHC 2553 (QB).

Bean J's decision is available on BAILII at http://www.bailii.org/ew/cases/EWHC/QB/2014/2553.html and the Supreme Court's decision is at http://www.bailii.org/uk/cases/UKSC/2016/9.html.

Permission for the 'leapfrog' appeal was given to enable the Supreme Court to consider a frontal challenge to the rules set out in Cookson v Knowles [1979] AC 556 and Graham v Dodds [1983] 1 WLR 808 for the calculation of multipliers in fatal cases.  Those cases established that the multiplier was to be selected as arising at the date of death, with the number of years between death and trial being deducted from the multiplier to give the multiplier applicable to the claims for future dependency.

Having considered the extensive criticism of this rule over the last three decades by judges, the Ogden Tables working party and the Law Commission, a unanimous 7-judge Supreme Court had no hesitation in applying the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234 and departing from the previous decisions of the House of Lords.  Cookson and Graham had been decided in an era when the selection of multipliers was governed by judicial guesswork, sometimes educated and sometimes not, rather than the actuarial approach of the Ogden Tables.

Henceforth, multipliers are calculated from the date of trial, as with non-fatal cases, rather than the date of death.  This will result in a small rise in the value of most, if not all dependency claims.

The difference between the old and new approaches can be shown by an example.  The case concerns a married male without dependent children who is killed on his 60th birthday.  He would have worked to the age of 70, earning £50,000 net per annum, with his wife earning £30,000 net per annum and retiring at the same time (I have assumed that these figures reflect the table A to D discounts for simplicity).  On retirement, he would receive a pension of £20,000 net per annum, compared with hers of £15,000 net per annum.  He had a slightly reduced life expectancy of 20 years due to medical conditions unrelated to his death.  The wife has a normal life expectancy and would have been expected to outlive him.  The assessment of damages takes place on what would have been his 65th birthday.

 

OLD APPROACH

(1) Pre-trial financial dependency

Multiplicand: ((50,000 + 30,000) x 0.75) - 30,000 = 30,000

Years to trial: 5

Total: 30,000 x 5 = £150,000

(2) Post-trial financial dependency: to retirement

Multiplicand: 30,000

Multiplier for loss of earnings to age 70 (table 11) from age 60: 8.45

Adjusted multiplier with years to trial deducted: 8.45 - 5 = 3.45

Total: 30,000 x 3.45 = £103,500

(3) Post-trial financial dependency: retirement to projected death

Multiplicand: ((20,000 + 15,000) x 0.75) - 15,000 = £11,250

Multiplier for 20 years life expectancy at date of death (table 28): 15.78

Adjusted multiplier with years to trial and pre-retirement multiplier deducted: 15.78 - 5 - 3.45 = 7.33

Total: 11,250 x 7.33 = £82,462.50

GRAND TOTAL: 150,000 + 103,500 + 82,462.50 = £335,962.50

 

NEW APPROACH

(1) Pre-trial financial dependency

Multiplicand: £30,000

Years to trial: 5

Total: 30,000 x 5 = £150,000

(2) Post-trial financial dependency: to retirement

Multiplicand: £30,000

Multiplier for loss of earnings to age 70 (table 11) from age 65: 4.54

Table E factor: 0.97

Final multiplier: 4.54 x 0.97 = 4.40

Total: 30,000 x 4.40 = £132,000

(3) Post-trial financial dependency: retirement to projected death

Multiplicand: £11,250

Multiplier for 15 years life expectancy at date of death (table 28): 12.54

Table F factor: 0.94

Final multiplier: (12.54 - 4.40) x 0.94 = 7.65

Total: 11,250 x 7.65 = £86,080.50

GRAND TOTAL: 150,000 + 132,000 + 86,080.50 = £368,080.50

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